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How much should be deposited at the end of each month in an account paying 7.5% for it to amount to $10,000 in 5 years?

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Final answer:

To amount to $10,000 in 5 years, approximately $135.41 should be deposited at the end of each month with a 7.5% interest rate.

Step-by-step explanation:

To calculate the amount that should be deposited at the end of each month in an account paying 7.5%, we can use the formula for the future value of an ordinary annuity:

FV = P * [(1 + r)^n - 1] / r

Where:

  • FV is the future value (in this case, $10,000)
  • P is the monthly deposit
  • r is the interest rate per period (7.5% / 12)
  • n is the number of periods (5 years * 12 months)

Plugging in the values:

10000 = P * [(1 + (0.075/12))^(5*12) - 1] / (0.075/12)

Simplifying the equation will give us:

P ≈ $135.41

So, approximately $135.41 should be deposited at the end of each month.

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